Whatever your goals are, you will inevitably face setbacks – you’ll give in to a moment of weakness, or just find that an unexpected event wreaks havoc on your plans. Life happens. But the important thing is not to let those setbacks impede future progress any more than absolutely necessary. Instead, follow these five steps to bounce back.

Bouncing Back

1. Assess how much damage was done. If you simply blew your food budget by $5 on the last day of the month, you can probably just relax and start anew the next month. If you spent triple your monthly shopping budget on the first day of the month, though, you might have a bigger problem. So figure out how big of a setback you are really facing.
2. Ask yourself why the problem happened. Was your setback a result of something that you could control? Were your goals unrealistic? For instance, you probably can’t save $1,000 a month if you bring home $3,000 and spend $1,500 on housing. Think about what lessons you can learn from this setback – how you can change your plans, behavior, outlook, or some combination of the three to set goals that are attainable without being easy.
3. Determine if the setback is easily fixable. If you were $150 over budget in one category, but $200 under across other categories, you can kind of “reassign” your dollars and end up ok. If you “overshopped,” see about returning some things you haven’t used yet. And if you have an emergency fund but suddenly find yourself needing new tires months before you thought you would, there’s no need to worry about where the money will come from – that’s what emergency funds are for. But if there’s really a one-time event that just leaves you a little short of reaching your goals, let it go – almost all goals can be postponed briefly.
4. Put steps in place to get back on track. If you fell $200 short of your monthly debt repayment goal, see if you can squeeze $50 per month from somewhere else for the next four months. A no-spend weekend can be just what you need to stave off disaster. If your problem was that you just didn’t have an adequate emergency fund, take steps to build one. If it truly turns out that your goals were just too hard to reach, see if your debt repayment can be stretched a month or two further, or that family vacation delayed to winter break instead of summer. And if the setback was something you should have foreseen and planned for, work on how you can do that next time.
5. Move on. Don’t dwell on this one setback. Chances are it’s not going to ruin you financially. But dwelling on it could have emotional and ultimately financial ramifications. So put it behind you, and resolve to do better next month.

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Everyone has their own scary age when it comes to life – details on mine are for another post! But when it comes to finances, 25 is definitely my scary age. And since I turned 24 a month ago, it’s quickly approaching.

Why 25 Scares Me

We’ve all seen those graphs in blog posts and news articles encouraging us to save at an early age, and showing us the difference between starting a savings plan at two ages – the younger age is ALWAYS 25. Many online retirement calculators start at 25. What that means to me is that the years before 25 are freebies – you can mess up financially, and still have plenty of time to bounce back. But after 25, you need to save. And plan. And it all matters.

Since I graduated from college and started learning about personal finance, I’ve always been younger than 25. Even if I’m not doing things 100% correctly, I tell myself it’s ok because those were “bonus” years. But once I turn 25, the stakes (in my head at least) are just a little bit higher – and if I’m not saving enough, or choosing the right investments, or generally not making the “right” decisions, it could really have an impact down the road! So I need to learn more about investments, save a higher percentage of my paycheck, and knock out my student loan. When I think about doing all that and the financial ramifications of starting grad school and buying a house in the next few years, I can really work myself into a tizzy!

How I’ll Prepare

Here are some things I’ve already done or plan to do to combat my financial anxiety about turning 25:

• Earn side income above and beyond my normal paycheck, and use it to eliminate my student loan.
• Increase my Roth IRA/401(k) savings every time I get a raise. (Yes, you can have a 401k and an IRA at the same time.
• Create my own “dollar plan” that maps out some mid- to long-term goals, and their financial ramifications.
• Create a long-term investment plan with a target asset allocation and growth projections.
• Remember that 25 is just a number – good habits are the most important, and less-than-optimal saving or investing is better than none at all.

What it Means for You

I’m guessing that everyone has their own financial scary age. Maybe yours is the year you plan to retire. The years between your retirement and Medicare kicking in. The year you have a child, or the year your child starts college.

No matter what your financial scary age is, it’s probably tied to a certain event that you can plan for. So start now. Decide how much you need to save to meet a certain goal, how you can step up your debt elimination plan to get rid of payments sooner, or what kind of self-education you need to stay on the right track. Talk to your spouse or child, if applicable, and work together to combat some of the financial stressors in your life. Control what you can, and let go of the rest. Know that if you’re reading sites like this one, you’re probably ahead of a whole lot of people in similar situations.

And if all else fails, have an extra big piece of cake – and a few birthday freebies -on the day of your scary-age birthday!

What’s your scary age, and what are you doing to prepare for it? Tell us in the comments!

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I completed this exercise three years ago to make sure that my work life balance and other aspects of my life were in line with my priorities. I decided it was time to revisit the exercise. Here’s what my pie looks like right now.  

I think it’s a pretty good looking pie as far as my priorities in life. Here’s some of the highlights:

• Children is my time alone with the kids; Family time is the time spent with all four of us together.
• Personal time includes time by myself and time alone with my spouse without the kids.
• Leisure includes recreation. I could probably stand to get a little more recreation in!
• Business time is primarily devoted to My Dollar Plan right now.
• Household & Money includes making dinner, grocery shopping, paying bills, etc.

As you know, I’m headed back to work. Starting next week, I’m going to need to squeeze in another 32% of my time to make room for my job. Essentially, I’m going to have to take my happy pie and squeeze it into 67% of my time going forward.

Making Adjustments

Of course, it’s not just going to slide in neatly. Some categories will need to adjust more than others. There’s only so much time in a day, and my family comes first. However, it’s important not to lose site of making personal time for yourself and your spouse too. I’ll probably need to scale back on the business too to make it all fit in. It’s important that I not only achieve work life balance, but also balance in my time spent away from work.

Part of a successful strategy towards life can also be applied towards aspirations of wealth. Don’t focus on something 100% of the time or you might miss out on other important parts of life. When one of my ideas ends up taking too much time, I cut it off… like the couponing that started taking too much time. This helps keep my life in balance.

Creating Your Own Life Mix Pie Chart

This is a fun exercise to do for a week. Track how many hours you spend on things and total it up at the end of the week. Calculate your percentages and draw a pie chart. Does it match your priorities and values? If not, what do you have to change?

Recently The Digerati Life wrote the Supermom Myth. She identified some categories that might help you get started:

Family: we enjoy our kids and hope to be good parents
Health: we’d love to live a productive, comfortable existence
Money: we aim to be financially independent
Personal Time: how about some time to ourselves?
Friends and Community: we seek social interactions
Church (for a good number of us): we nurture our spiritual side
Leisure and Recreation: we’d like some time for play
Business: we hope to build something both fulfilling and profitable
Job: we’re looking to further our careers
Household Obligations: we’ve got a house to run

Action Plan

I’m going to have to be more efficient with some of my interests if I want my chart to continue to reflect my priorities. Since some of my business time will be scaled back I’m going to make some adjustments at My Dollar Plan. One of the changes you will likely see is posts on weekdays only. I might respond a little slower to emails, however, I will still read every single one! Hopefully you’ll get your dose of my babbling during the week. On the weekends, you can work on making your life mix chart and I’ll be working on spending quality time with my family!

What does your pie chart look like?

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